Thông tư 56/2014/TT-BCT phương pháp xác định giá phát điện

CIRCULAR

On providing method to determine electricity generation prices, sequence to inspect power purchase agreement
 

Pursuant to the Government’s Decree No. 95/2012/ND-CP dated November 12, 2012, defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Electricity Law dated December 03, 2004 and the Law Amending and Supplementing a Number of Articles of the Electricity Law dated November 20, 2012;

Pursuant to the Government’s Decree No. 137/2012/ND-CP dated October 21, 2013 detailing the implementation of a number of articles of the Electricity Law and the Law Amending and Supplementing a Number of Articles of the Electricity Law;

At the proposal of Director General of the Electricity Regulatory Authority of Vietnam,

The Minister of Industry and Trade hereby promulgates the Circular on providing method to determine electricity generation prices, sequence to inspect power purchase agreement.

 

Chapter I

GENERAL PROVISIONS

 

Article 1. Scope of regulation and subjects of application

1. This Circular provides regulations on:

a) Method to determine electricity generation prices and power purchase agreement template applicable to subjects specified in Clause 2 of this Article;

b) Sequence to inspect power purchase agreement.

2. This Circular applies to the following subjects:

a) Power generating units owning power plants connected with the national electricity system with total nominal capacity of more than 30MW, power plants with nominal capacity of 30MW or under that volunteer to join electricity market, except for multi-target strategic hydroelectric power plants, independent power plants (those were invested in the form of Build - Operate – Transfer (BOT)) and power plants using renewable energy such as wind, geothermy, tides and biomass;

For other power plants without a separate mechanism provided by the Ministry of Industry and Trade, regulations specified in this Circular shall be complied with.

b) Other concerned organizations and individuals

Article 2. Interpretation of terms

In this Circular, the below terms are construed as follows:

1. Seller means electricity generating units granted with the operation license in electricity generation.
2. Buyer means the Vietnam Electricity.
3. Project owner means an organization or individual directly involved in managing and using capital to invest in power plant projects.
4. Net capacity means nominal capacity converted into measurement positions to serve the payment between the Seller and Buyer (kW).
5. Delivered electricity energy means the entire electricity energy delivered to the Buyer by the Seller at the measurement positions in service of the payment between the Seller and Buyer (kW).
6. Electricity generating unit means the unit owning one or many power plants.
7. National electricity system and market operator means the National Load Dispatch Centre of Vietnam (A0).
8. Total initial approved project investment capital means the total investment capital accompanied by the first basic design approved by the competent agency under the Government’s Decree No. 12/2009/ND-CP dated February 12, 2009 on management of construction investment projects or replacement documents.
9. Settled investment capital means the entire lawful expense that is implemented during the investment in order to put the project into operation, settled and audited according to the state regulations. Lawful expense means the one implemented within the scope of approved design and estimates, including adjustments and supplements in compliance with the signed agreement and laws. Settled investment capital must be within the total investment capital limit approved (or revised) in accordance with the competent authority’s decisions.
10.  Base year means the year for determining the total initial approved project investment capital or settled investment capital.
11.  New power plant means a power plant without a power purchase agreement signed for the first time.
12. Other power plants include power plants that sell the excess production electricity to the Vietnam Electricity, power plants that supply auxiliary services for electrical system and thermal power plants with the capacity of supplying main fuel is restricted, greatly affecting the power generation.
13. The two parties mean the Seller and Buyer in the power purchase agreement.
14. Power purchase agreement template means an agreement template for the electricity sale and purchase of each power plant specified in Appendix 3 of this Circular.
15.  Net fuel loss rate means the amount of fuel consumed to produce one kWh of electricity energy at the delivery point (kg/kWh).
16. Net heat loss rate means the amount of heat consumed to produce one kWh of electricity energy at the delivery point (BTU/kWh or kJ/kWh or kcal/kWh).

 

Chapter II

METHOD TO DETERMINE THE PRICE FOR POWER PURCHASE AGREEMENTS

 

Section 1. METHOD TO DETERMINE THE PRICE FOR POWER PURCHASE AGREEMENTS FOR NEW POWER PLANTS

 

Article 3. Principles for determining the price for power purchase agreements

1. Power purchase agreement price of a power plant shall be made on a basis of:

a) The Project owner shall pay appropriate expenses for the entire economic life of the project.

b) The internal rate of return (IRR) does not exceed 12%.

2. Power purchase agreement price of a thermal power plant is calculated in VND/kWh, including two following components:

a) Electricity generation price shall be agreed upon by the two parties in the base year and shall not exceed electricity generation price frame of thermal power plants that is approved by the Minister of Industry and Trade in the base year; the electricity generation price is formulated according to the method specified in Article 4 of this Circular;

b) Main fuel transport price shall be agreed upon by the two parties in the base year and determined according to the method specified in Article 8 of this Circular.

3. Power purchase agreement price of hydroelectric power plants is the electricity generation price calculated in VND/kWh. The power purchase agreement price of hydroelectric power plants shall be agreed upon by the two parties in the base year and does not exceed electricity generation price frame of hydroelectric power plants approved by the Minister of Industry and Trade in the base year. The power purchase agreement price of hydroelectric power plants is determined according to the method specified in Article 9 of this Circular.

4. The power purchase agreement price does not include value-added-tax (VAT), water resource tax, fees for forest environment service and environmental protection for solid waste (applicable to thermal power plants), expenses for construction of transmission lines and other taxes, charges as prescribed by the State (except for taxes and charges included in the electricity price plan).

5. After the settled investment capital is determined, the Seller shall send to the Buyer the set of dossiers related to the settled investment capital. The Seller or Buyer has the right to ask for re-determining power purchase agreement price according to the following principles:

a) The Seller or Buyer shall issue a written document requesting the Electricity Regulatory Authority of Vietnam to give opinions on re-negotiation of electricity price and power purchase agreement according to the settled investment capital by the two parties. Dossiers submitted to the Electricity Regulatory Authority of Vietnam shall comply with Article 22 of this Circular;

b) After the Electricity Regulatory Authority of Vietnam gives opinions, the Seller and Buyer shall re-negotiate the power purchase agreement price according to the following principles:

• Method to determine the power purchase agreement price is prescribed in Article 4 (for thermal power plants) and Article 9 (for hydroelectric power plants) of this Circular;
• Parameters to calculate the power purchase agreement price is prescribed in Article 4 (for thermal power plants) and Article 9 (for hydroelectric power plants) of this Circular and updated at the same time of determining the settled investment capital;
• Electricity generation price is included in the electricity generation price frame of the year when the settled investment capital is formed;
• Electricity generation price shall be applied from the date of commercial operation of the plants; the annual price shall comply with Article 12 of this Circular and the annual price shall not be revised before both parties sign in the agreement on amending and supplementing the power purchase agreement according to the electricity price determined according to settled investment capital.

Article 4. Method to determine the power purchase agreement price for thermal power plants

Power purchase agreement price of thermal power plants in the base year ((VND/kWh)) is determined according to the following formula:

PCND = PG + PbVC

1. PG (VND/kWh) is the electricity generation price in the base year and determined according to the following formula:

PG = FC + FOMCb + VCb

In which:

FC: Average fixed price determined under Article 5 of this Circular (VND/kWh);

FOMCb: Fixed price for operation and maintenance in the base year that is agreed upon by the two parties under Article 6 of this Circular (VND/kWh);

VCb: Variable price determined under Article 7 of this Circular (VND/kWh);

Electricity generation price (PG) must not exceed the electricity generation price frame provided by the Minister of Industry and Trade. In case where the capacity of thermal power plants is different from the capacity of standard power plants but within ± 10% of capacity of standard power plants, the cost frame of nearest standard power plants of the same technology and assembly number shall be applied.

As for thermal power plants with total capacity of 200 MW and under and thermal power plants with capacity beyond ± 10% of standard power plants, the electricity generation price shall be determined for each specific case according to the method specified in this Chapter corresponding to the parameters prescribed in Appendix 1 of this Circular.

2. PbVC (VND/kWh) is the price for transport of main fuel in the base year determined according to the method specified in Article 8 of this Circular.

3. Cost for trial operation and acceptance of thermal power plants:

a) As for the cost for trial operation and acceptance before the thermal power plant is put into commercial operation, the two parties shall negotiate on the basis of total investment capital approved for the first time.

b) With regard to the cost for trial operation and acceptance arising after the thermal power plant is put into commercial operation, the Buyer shall be responsible for paying fuel cost to the Seller as prescribed.

Article 5. Method to determine the average fixed price for thermal power plants

1. Average fixed price for thermal power plants (FC) is determined according to financial analysis of projects according to Forms 1 and 2 specified in Appendix 2 attached to this Circular with IRR not exceeding 12%. Input parameters for the construction of average fixed price for thermal power plants (FC) is determined according to instructions provided in Clause 2 of this Article.

2. Main input parameters used for calculation of average fixed price for thermal power plants (FC):

a) Total investment is determined according to the total first investment capital or settled investment capital (VND); expenses for investment, upgrading of equipment to maintain operation of power plants after 20 years of commercial operation shall not be included in the project’s total investment capital or settled investment capital;

b) Economic life is prescribed in Appendix 1 of this Circular. In case a written document on approval of the project’s economic life issued by competent state agencies is different from the provisions in this Circular, the written approval of the competent state agencies shall be applied (year);

c) Average electricity energy annually generated at terminals is determined according to approved design terminal capacity and the number of hours of operation of the plant at average maximum capacity over years (Tmax). In which, the number of hours of operation of the plant at average maximum capacity over years Tmax is determined according to the approved design but not less than the number of hours of operation of the plant at average maximum capacity over years specified in Appendix 1 of this Circular. The rate of power loss is averaged over the entire economic life of the power plant agreed by the two parties on the basis of the equipment manufacturer’s technical documents. Particular for gas turbine plants, gas supply capability approved by the competent agency is taken into account in the average electricity energy annually generated at terminals (kWh);

d) The rate of auxiliary power and losses to transformers of the power plant, losses to transmission lines (if any) is determined according to approved basic design of the power plant or the equipment manufacturer’s technical documents (%);

dd) Time for depreciation of each group of main fixed assets is determined according to average time for depreciation of each group of main fixed assets in accordance with time frame of main fixed asset depreciation specified in the Ministry of Finance’s Circular No. 45/2013/TT-BTC dated April 25, 2013, guiding the management, use and depreciation of fixed assets, or replacement documents. In case the time for fixed asset depreciation allowed in writing document by competent state agency is different from that specified by the Ministry of Finance, the time for fixed asset depreciation provided in the competent state agency’s documents shall be applied (year).

e) The ratio of ownership capital and loan capital of the total first investment capital: the ownership capital accounts for from 20 - 30 % and loan capital from 70 - 80 %. In case the percentage approved in writing by competent state agencies is different from that mentioned above, the written approval of the competent state agencies shall be applied (%);

g) Loan interests and period of repayment during the operation is based on loan agreements, or documents binding the Project owner and credit institutions, lending banks of which average interests of the loans do not exceed interest rate ceiling as prescribed as follows:

- Foreign currency loan interest rate: is determined by the average value of the USD swap interest rate for 10 years in the 36 months preceding the negotiation time on the London interbank market (LIBOR swaps[1]) plus the average annual rate for banks' fees, guarantee fees and related taxes which is 3% or announced by the Ministry of Industry and Trade;

- Domestic currency loan interest rate: is determined by the average interest rate of deposits in Vietnam Dong with a 12-month postpaid term for individual customers of the 5 consecutive years preceding the year of negotiation, determined on September 30 every year by four commercial banks (Joint stock commercial Bank for Foreign Trade of Vietnam, Vietnam Bank for Trade and Industry, Joint Stock Commercial Bank for Investment and Development of Vietnam, Vietnam Bank for Agriculture and Rural Development or legal successors to these banks) plus an average annual margin interest rate of 3.5% or announced by the Ministry of Industry and Trade;

Total loan capital in the calculation of electricity price according to total first investment capital is determined by subtracting ownership capital from total investment capital. In case total loans from loan agreements or documents, agreements binding the project owner and credit institutions, lending banks are lower than total loans in electricity price calculation plan, the loan deficit during the operation is calculated as follows:

- Period of repayment is determined according to repayment plan according to the financial analysis report in the approved basic design, in which the period of repayment is at least ten years;

- Loan interest rate is determined according to loan interest according to the financial analysis report in the approved basic design of which average loan interests do not exceed interest rate ceiling as mentioned above.

h) Enterprise income tax rate, other fees and charges are determined according to current regulations.

Article 6. Method to determine the fixed price for operation and maintenance of thermal power plants

Fixed price for operation and maintenance in the base year FOMCb (VND/kWh) is determined according to the following formula:

FOMCb = FOMCbscl+ FOMCbnc

In which:

FOMCbscl: Fixed price for operation and maintenance according to major repair cost and other expenses in the base year determined according to Clause 1 of this Article (VND/kWh);

FOMCbnc: Fixed price for operation and maintenance according to workforce cost in the base year determined according to Clause 2 of this Article (VND/kWh);

1. Fixed price for operation and maintenance according to major repair cost and other expenses in the base year  (VND/kWh) is determined as follows:

In which:

TCscl: Total major repair cost and other expenses in the base year consist of major repair cost, expenses for additional materials, outside services, and others (VND). In case total major repair cost and other expenses as mentioned above cannot be determined, the two parties shall apply calculation method specified in Clause 3 of this Article;

Pt: Generator terminal capacity according to approved design, determined according to Point c, Clause 2, Article 5 of this Circular (kWh);

Tmax : Number of hours of operation at average maximum capacity over years, determined according to Point c, Clause 25, Article 5 of this Circular (kWh).

ttd: The rate of auxiliary power and losses to the plant, determined according to Point d, Clause 2, Article 5 of this Circular (%);

kCS:  The rate of power attenuation averaged over the entire economic life of the power plant, determined according to Point c, Clause 2, Article 5 of this Circular (%).

2. Fixed price for operation and maintenance according to workforce cost in the base year FOMCbnc (VND/kWh) is determined according to the following formula:

In which:

TCnc: Total workforce cost in the base year consists of payroll, social insurance cost, healthcare insurance cost, union funds and other attached allowances (VND). In case total workforce cost as mentioned above cannot be determined, the two parties shall apply calculation method specified in Clause 4 of this Article;

Pt: Generator terminal capacity according to approved design, determined according to Point c, Clause 2, Article 5 of this Circular (kWh);

Tmax : Number of hours of operation at average maximum capacity over years, determined according to Point c, Clause 25, Article 5 of this Circular (kWh);

ttd: The rate of auxiliary power and losses to the plant, determined according to Point d, Clause 2, Article 5 of this Circular (%);

kCS: The rate of power attenuation averaged over the entire economic life of the power plant, determined according to Point c, Clause 2, Article 5 of this Circular (%).

1. Total major repair cost and other expenses TCscl (VND) are determined according to the following formula:

TCcsl =VĐTXL+TB x kF,scl

In which:

VĐTXL+TB: Total investment capital for construction and equipment of a thermal power plant, determined on a basis of the total investment capital specified in Clause 2, Article 5 of this Circular (VND);

kF,scl:  The rate of major repair cost and other expenses (%) of the thermal power plant, kF,scl is prescribed in Appendix 1 of this Circular.

2. Total workforce cost TCnc (VND) is determined according to the following formula:

TCnd =VĐTXL+TB x kF,scl

In which:

VĐTXL+TB: Total investment capital for construction and equipment of a thermal power plant is determined on a basis of the total investment capital specified in Clause 2, Article 5 of this Circular (VND);

kF,scl: The rate of workforce cost (%) of the thermal power plant, kF,scl is prescribed in Appendix 1 of this Circular.

Article 7. Method to determine the variable price of thermal power plants

Variable price of a thermal power plant in the base year VCb (VND/kWh) is determined according to the following formula:

VCb = + +

In which:

VCbnlc: Components of variable price revised according to changes to cost of main fuel (coal, gas) for the thermal power plant in the base year, determined according to the method specified in Clause 1 of this Article (VND/kWh);

VCbnlb: Components of variable price revised according to changes to cost of secondary fuel (oil) of the power plant in the base year, determined according to the method specified in Clause 2 of this Article (VND/kWh);

VCbk: Components of variable price revised according to other changes of the power plant in the base year, determined according to the method specified in Clause 3 of this Article (VND/kWh);

1. Components of variable price revised according to changes to cost of main fuel of the power plant in the base year (VND/kWh), determined according to the following formula:

In which:

HRbqnlc: Average net fuel loss rate of main fuel agreed by the two parties on the basis of the equipment manufacturer’s specifications and calculated in proportion with loading level specified in Appendix 1 of this Circular (kg/kWh or BTU/kWh);

Pbnlc: Price of main fuel in the base year is regulated as follows:

• For domestic coal: Price of coal is the price at the coal supplier’s loading point including losses, management fee and insurance (if any), excluding transport charges (VND/ton). In case the charges for transport of fuel cannot be separated from the coal purchase agreement, the price of fuel in the base year is determined as the price of the coal purchase agreement (VND/ton);
• For imported coal: Price of coal is the price at the exporter’s port (VND/ton);
• For gas: Price of gas is the price at the mine (VND/BTU);

2. Components of variable price revised according to changes to cost of secondary fuel in the base year VCbnlp (VND/kWh) is determined according to the following formula:

In which:

HRbqnlp: Average net fuel loss rate of secondary fuel (oil) agreed by the two parties on the basis of the equipment manufacturer’s specifications (kg/kWh);

Pbnlp: Price of secondary fuel in the base year, including transport charges and other charges as prescribed (VND/kg).

3. Components of variable price revised according to other changes in the base year VCbk (VND/kWh) is determined according to the following formula:

In which:

Cvlp:  Total annual cost of secondary materials of the power plant is determined according to quantity and unit price of secondary materials used for generation of electricity in the base year (VND);

Ckd: Total cost for starting operation consists of fuel cost and other costs (VND); with regard to coal-fired thermal power plant, permissible number of starts is calculated as once a year corresponding to each state of starting; with regard to gas turbine power plant, permissible number of starts shall be negotiated by the two parties on the basis of demand for electricity system and operation characteristic of the power plant;

Ck:  Annual cost for repair and maintenance is calculated on the basis of total capital for construction and equipment of the power plant; the rate of regular repair cost is prescribed in Appendix 1 of this Circular (VND);

Pt­:  Total net capacity of the power plant (kW);

kCS: The rate of power attenuation averaged over the entire economic life of the power plant is determined according to Point c, Clause 2, Article 5 of this Circular (%);

Tmax: Period of operation of the plant at maximum capacity is averaged over years throughout the life of the power plan project (hours) and prescribed in Appendix 1 of this Circular.

Article 8. Method to determine the price for transport of main fuel with respect to thermal power plant

Main fuel transport price of a thermal power plant in the base year (Pbvc) is determined according to the following formula (VND/kWh):

 =  ´

In which:

HRbqnlc: Average fuel loss rate of main fuel for coal-fired thermal power plant (kg/kWh) or average heat loss rate of main fuel for gas turbine plants (BTU/kWh), and determined according to Clause 1, Article 7 of this Circular;

Pbv/c: Price for transport of main fuel for generation of electricity in the base year is calculated in VND/kg with respect to coal fuel or in VND/BTU with respect to gas fuel.

Article 9. Method to determine the power purchase agreement price for hydroelectric power plants

Power purchase agreement price of hydroelectric power plants PbTĐ (VND/kWh) is determined according to the following formula:

 = FC + FOMCb

In which:

FC: Average fixed price of the plant is determined according to the method prescribed in Article 10 of this Circular (VND/kWh);

FOMCb: Operation and maintenance price of the plant is determined according to the method prescribed in Article 11 of this Circular (VND/kWh);

Article 10. Method to determine the average fixed price for hydroelectric power plants

1. Average fixed price for hydroelectric power plants (FC) is determined according to financial analysis of projects according to Forms 1 and 2 specified in Appendix 2 attached to this Circular with IRR not exceeding 12% and input parameters as instructed in Clause 2 of this Article.

2. Input parameters are used for calculation of electricity price:

a) Total investment cost, economic life, the rate of auxiliary power and losses to transformers (excluding losses to transmission lines if any), proportion of ownership capital, loan capital, time of depreciation, loan interests, term of repayment during operation, enterprise income tax and other taxes and charges are determined according to Clause 2, Article 5 of this Circular;

b) Average electricity energy annually generated at terminals of hydroelectric power plant is determined according to approved basic design (kW). In case a written approval is issued by the competent agency, such written approval shall be applied.

Article 11. Method to determine the price for operation and maintenance of hydroelectric power plants

Price for operation and maintenance in the base year (FOMCb) is determined according to the following formula (VND/kWh):

FOMCb = +

In which:

FOMCbscl: Fixed price for operation and maintenance according to major repair cost and other expenses in the base year, determined according to Clause 1 of this Article (VND/kWh);

FOMCbnc: Fixed price for operation and maintenance according to workforce cost in the base year, determined according to Clause 2 of this Article (VND/kWh);

1. Price for operation and maintenance according to major repair cost and other expenses in the base year (FOMCbsc) is determined according to the following formula;

In which:

TCscl: Total major repair cost and other expenses in the base year consist of major repair cost, expenses for secondary materials, outside services, and others (VND). In case total major repair cost and other expenses as mentioned above cannot be determined, the two parties shall apply calculation method specified in Clause 3 of this Article;

Abq: Electricity energy annually generated at the terminals is determined according to Point a, Clause 2, Article 10 of this Circular (kWh);

ttd :  The rate of auxiliary power and losses to transformers of the power plant is determined according to Point a, Clause 2, Article 10 of this Circular (%).

2. Price for operation and maintenance according to workforce cost in the base year (FOMCbnc) is determined according to the following formula:

In which:

TCnc: Total workforce cost in the base year including payroll, social insurance cost, healthcare insurance cost, union funds and other attached allowances (VND). In case total workforce budget as mentioned above cannot be determined, the two parties shall apply calculation method specified in Clause 4 of this Article;

Abq : Electricity energy annually generated at the terminals is determined according to Point a, Clause 2, Article 10 of this Circular (kWh);

ttd : The rate of auxiliary power and losses to transformers of the power plant is determined according to Point a, Clause 2, Article 10 of this Circular (%).

3. Total major repair cost and other expenses (TCscl) are determined according to the following formula:

TCcsl =VĐTXL+TB x kFscl

In which:

VĐTXL+TB: Total capital for construction and equipment of a hydroelectric power plant is determined according to total investment capital specified in Clause 2, Article 10 of this Circular (VND);

kscl:  Proportion of major repair cost and other expenses (%) of the hydroelectric power plant is prescribed in Appendix 1 of this Circular.

4. Total workforce cost (TCnc) is determined according to the following formula:

TCnc =VĐTXL+TB x knc

In which:

VĐTXL+TB: Total capital for construction and equipment of a hydroelectric power plant is determined according to total investment capital specified in Clause 2, Article 10 of this Circular (VND);

knc:  Proportion of workforce cost (%) of a hydroelectric power plant, knc is prescribed in Appendix 1 of this Circular.

 

Section 2. METHOD TO DETERMINE THE ELECTRICITY GENERATION PRICE BY YEAR IN THE POWER PURCHASE AGREEMENT

 

Article 12. Principles for determination of electricity generation by year in the power purchase agreement

1. The two parties have the right to apply average fixed price agreed in years during the power purchase agreement.

In case the two parties agree to convert average fixed price as agreed into the yearly price of the power purchase agreement, the determination of this price must conform to the principles specified in Clause 2 of this Article.

2. Based on conditions for actual loans and project's financial capability, fixed price of thermal power plants or hydroelectric power plants is converted into yearly price of the power purchase agreement ( fixed price for year j), provided that the average fixed price remains unchanged in comparison with the price agreed by the two parties and conforms to the following principles:

a) Financial discount rate in the calculation of yearly price is 10%;

b) The investor must perform repayment of loans for the construction of a power plant according to the term of repayment; highest proportion of revised fixed price since the date of commercial operation of the first assembly compared to the average fixed price of thermal power plant or hydroelectric power plants as agreed by the two parties does not exceed 1.2 times.

Article 13. Principles for revision of yearly price of the power purchase agreement

1. Annually, based on foreign currency loans, plan for repayment of foreign currency loans, actual figures about repayment of principals, exchange rate agreed by the two parties in the electricity price plan, exchange rate applied in the preceding year, the two parties must carry out calculation of difference of exchange rates and propose payment plan to the Electricity Regulatory Authority of Vietnam for inspection and making submission to the Ministry of Industry and Trade for consideration and decision on the payment plan.

2. Components of the fixed price for operation and maintenance of thermal power plants and hydroelectric power plants are revised in the following principles:

a) Price components by major repair cost and other expenses are revised according to the average cost slippage rate specified in Appendix 1 of this Circular. The two parties shall study and propose mechanism of revision of price components by major repair cost and other expenses for foreign currency based items.

b) Price components by workforce cost are revised according to changes to region-based minimum wages at the date of payment.

Article 14. Method to determine the price for power purchase agreements for thermal power plants at the date of payment

Power purchase agreement price of a power plant at the time of payment for electricity bills in month t, year j PC,j,t (VND/kWh) is determined according to the following formula:

In which:

: Fixed price in year j is determined according to Clause 1 of this Article (VND/kWh);

: Fixed price for operation and maintenance in month t, year j is determined according to Clause 2 of this Article (VND/kWh);

: Variable price in month t, year j is determined according to Clause 3 of this Article (VND/kWh);

: Price for transport of main fuel in month t, year j is determined according to Clause 4 of this Article (VND/kWh);

1. Fixed price in year j (FCJ) is determined according to Article 12 of this Circular.

2. Fixed price for operation and maintenance in month t, year j is determined according to the following formula:

In which:

: Components of the fixed price for operation and maintenance by major repair cost and other expenses in year j (VND/kWh);

: Components of the fixed price for operation and maintenance by workforce cost in month t, year j (VND/kWh);

a) Components of the fixed price for operation and maintenance by major repair cost and other expenses are determined according to the following formula (VND/kWh):

In which:

: Fixed price for operation and maintenance according to major repair cost and other expenses in the base year is determined according to the method specified in Clause 1, Article 6 of this Circular (VND/kWh);

i: Cost slippage rate of components of the fixed price for operation and maintenance by major repair cost and other expenses specified in Appendix 1 of this Circular;

I: Ordinal numbers of payment years starting from the base year (for the base year I=1).

b) Components of the fixed price for operation and maintenance by workforce cost in month t, year j () is determined according to the following formula (VND/kWh):

In which:

FOMCbscl: Fixed price for operation and maintenance by workforce cost is determined according to the method specified in Clause 2, Article 6 of this Circular (VND/kWh);

Lmin,j, t: Region-based minimum wages at the time of payment in month t, year j (VND/person/month);

Lmin,b: Region-based minimum wages in the base year (VND/person/month);

1. Variable price in month t, year j VCj,t (VND/kWh) is determined according to the following formula:

VCj,t = + +

In which:

VCj,tnlc: Components of variable price revised according to changes to cost of main fuel (coal, gas) of the power plant in month t, year j is determined according to Point a of this Clause (VND/kWh);

VCj,tnlc: Components of variable price revised according to changes to cost of main fuel (coal, gas) of the power plant in month t, year j is determined according to Point a of this Clause (VND/kWh);

VCjk: Components of variable price revised according to other changes in year j is determined according to Point c of this Clause (VND/kWh);

a) Components of variable price revised according to changes to cost of main fuel (coal, gas) of the power plant in month t, year j is determined according to the following formula:

In which:

VCbnlc: Components of variable price revised according to changes to cost of main fuel (coal, gas) of the power plant in the base year is determined according to the method specified in Clause 1, Article 7 of this Circular (VND/kWh);

kHS,j:  Proportion of performance attenuation in year j (%);

Pj,tnlc: Price of main fuel (coal, gas) for generation of electricity at the time of payment in month t, year j is calculated in VND/ton for coal and VND/BTU for gas;

Pbnlc : Price of main fuel (coal, gas) for generation of electricity in the base year is determined according to Clause 1, Article 7 of this Circular, calculated in VND/ton for coal and VND/BTU for gas.

b) Components of variable price revised according to changes to cost of secondary fuel (oil) of the power plant in month t, year j  (VND/kWh) is determined according to the following formula:

In which:

VCbnlp: Components of variable price revised according to changes to cost of secondary fuel (oil) of the power plant in the base year is determined according to the method specified in Clause 2, Article 7 of this Circular (VND/kWh);

Pj,tnlp: Price of secondary fuel (oil) for generation of electricity at the time of payment in month t, year j (VND/kg);

Pbnlp: Price of secondary fuel (oil) for generation of electricity in the base year (VND/kg).

c) Components of variable price revised according to other changes in year j  (VND/kWh) are determined according to the following formula:

In which:

VCbk: Components of variable price revised according to other changes of the power plant in the base year is determined according to the method specified in Clause 3, Article 7 of this Circular (VND/kWh);

i: Cost slippage rate of components of variable price revised according to other changes specified in Appendix 1 of this Circular;

I: Ordinal numbers of payment years starting from the base year (for the base year I=1).

2. Main fuel transport price of thermal power plant in month t, year j  (VND/kWh) is determined according to the following formula:

In which:

Pbvc: Price for transport of main fuel of the power plant in the base year is determined according to the method specified in Article 9 of this Circular (VND/kWh);

Pj,tv/c: Price for transport of main fuel (coal, gas) at the time of payment in month t, year j (VND/ton for coal or in VND/BTU for gas);

Pbv/c: Price for transport of main fuel (coal, gas) in the base year is calculated in VND/ton for coal or VND/BTU for gas.

3. Total cost for starting in month t of power plant is determined according to the following formula:

In which:

u: Order of assembly of the power plant;

U: Number of assemblies of the power plant;

F: Type of fuel (main fuel f =1, secondary fuel f=2);

S: State of starting of assembly;

S: Number of states of starting of assembly;

pu,f,s: Number of starts of assembly u, using fuel f in the state of starting s in the month;

Mu,f,s:  Quantity of lost coal (kg) for coal-fired power or quantity of lost heat for gas-fired power (BTU) for gas turbine for a starting of the assembly u, using fuel f, in the state of starting s;

Du,f,s: Unit price for a starting of the assembly u, using fuel f, in the state of starting s is calculated in VND/kg for coal and in VND/BTU for gas.

Ckdk : Total of other costs for a starting is calculated in Vietnam dong.

Payment of the cost for starting the plant is made in accordance with the Circular No. 30/2014/TT-BCT dated October 02, 2014 of the Ministry of Industry and Trade regulating operation of competitive electricity market or replacement documents.

Article 15. Method to determine the price for power purchase agreements for hydroelectric power plants at the time of payment

Power purchase agreement price of a hydroelectric power plant at the time of payment in month t, year j is determined according to the following formula:

In which:

: Fixed price in year j is determined according to Clause 1 of this Article (VND/kWh);

FOMCj,t: Price for operation and maintenance in month t, year j is determined according to Clause 2 of this Article (VND/kWh);

1. Fixed price in year j (FCJ) is determined according to Article 12 of this Circular.

2. Price for operation and maintenance in month t, year j is determined according to the following formula:

In which:

FOMCjscl: Components of the price for operation and maintenance by major repair cost and other expenses in year j (VND/kWh);

FMOCjnc: Components of the fixed price for operation and maintenance by workforce cost in month t, year j (VND/kWh);

a) Components of the price for operation and maintenance by major repair cost and other expenses are determined according to the following formula:

In which:

FOMCbscl: Components of the price for operation and maintenance by major repair cost and other expenses in the base year is determined according to Clause 1, Article 11 of this Circular (VND/kWh);

i: Cost slippage rate of components of the price for operation and maintenance by other costs specified in Appendix 1 of this Circular;

I: Ordinal numbers of payment years starting from the base year (for the base year I=1).

b) Components of the price for operation and maintenance by workforce cost in month t, year j () is determined according to the following formula (VND/kWh):

In which:

FOMCbnc: Components of the price for operation and maintenance by workforce cost in the base year is determined according to Clause 2, Article 11 of this Circular (VND/kWh);

Lmin,j, t: Region-based minimum wages at the time of payment in month t, year j (VND/person/month);

Lmin,b: Region-based minimum wages in the base year (VND/person/month).

 

Section 3. METHOD TO DETERMINE THE ELECTRICITY PRICE OF POWER PLANTS PUT INTO COMMERCIAL OPERATION

 

Article 16. Method to determine the electricity price for power plants with power purchase agreement expired but economic life unexpired

1. With regard to power plants that have average price for the entire life, power purchase agreement price shall be applied to the following years to the end of economic life.

2. With regard to power plants that have no average price for the entire project life, the two parties shall negotiate on average price, yearly price since the effective year of the power purchase agreement to the end of economic life of the plant, power purchase agreement specified of this Circular.

3. With regard to equitized power plants affiliated to the Vietnam Electricity, apply provisions in Clause 1 or 2 of this Article and the effective year shall be from the time of equitization.

Article 17. Method to determine the electricity price for power plants with expired economic life or under upgrading, replacement of equipment after 20 years of commercial operation

1. Price of hydroelectric power plants and fixed price of thermal power plants with economic life expired are determined on the principle ensuring that the plant recovers all the expenses serving electricity production and business activities and the time for price calculation shall follow cycle of major repair of main equipment. In case a written approval of price calculation time issued by the competent state agency, this written approval shall be put into practice. The two parties negotiate and make the report to the Ministry of Industry and Trade, Electricity Regulatory Authority of Vietnam for consideration.

2. Variable price of thermal power plant with economic life expired is determined according to Article 7 of this Circular.

3. In case the power plant is brought into upgrading or replacement of equipment to maintain operation after 20 years, power purchase agreement price shall be considered and revised appropriately upon receipt of adequate documents.

Article 18. Method to determine the electricity price for other plants

1. Based on instructions provided in this Circular, the Vietnam Electricity and generating units shall construct the method of determining power purchase agreement price, separate mechanisms in conformity with the plant and make the submission to the Electricity Regulatory Authority of Vietnam for inspection and making the report to the Ministry of Industry and Trade for consideration and approval.

2. After written instructions are issued by the Ministry of Industry and Trade, the Vietnam Electricity and generating units shall negotiate to reach an agreement and make the submission to the Electricity Regulatory Authority of Vietnam for inspection specified in Articles 20, 21, 22 and 24 of this Circular.

 

Chapter III

SEQUENCE OF NEGOTIATION AND INSPECTION OF POWER PURCHASE AGREEMENT

 

Article 19. Application of power purchase agreement template

1. As for new power plants, in reliance on power purchase agreement template specified in Appendix 3 attached to this Circular, the Vietnam Electricity and generating units shall negotiate on the power purchase agreement between the two parties.

2. With regard to power plants with a power purchase agreement signed, in case either of the two parties wishes to make amendments according to the power purchase agreement template specified in Appendix 3 attached to this Circular, the two parties shall negotiate and reach agreement and make the report to the Electricity Regulatory Authority of Vietnam for consideration, inspection and advices specified of this Circular.

Article 20. Sequence of negotiation on power purchase agreement

1. The project owner of the power plant project shall be responsible for sending to the Buyer for negotiation and fulfillment of procedures for appraisal and approval for the signing of power purchase agreement before the project starts.

2. Within 15 working days since the receipt of dossier of request for from the project owner, the Buyer shall be responsible for organizing negotiation with the project owner on power purchase agreement. When the process of negotiation closes, the two parties must initial the draft power purchase agreement.

3. Within five working days since the draft power purchase agreement is initialed, the Buyer shall be responsible for establishing the documents for approval of the power purchase agreement and making submission to the Electricity Regulatory Authority of Vietnam for inspection.

4. After six months since the Buyer receives without any agreement reached, the Buyer shall be responsible for making the report on the matters not yet agreed to the Electricity Regulatory Authority of Vietnam for consideration and advice. As for matters beyond authority, the Electricity Regulatory Authority of Vietnam shall be responsible for making the report to the Ministry of Industry and Trade for consideration and advice.

Article 21. Dossiers of request for negotiation on power purchase agreement

1. A dossier of request for negotiation on power purchase agreement of power plants include:

a) Written request for negotiation on power purchase agreement;

b) Draft power purchase agreement specified in Appendix 3 attached to this Circular;

c) Decision on project investment and construction accompanied by explanations and investment project assessment report by independent consultants and other relevant documents;

d) Decision on approval of total first investment capital of the project and main issues in basic design of the investment project relating to power purchase agreement negotiation, basic design assessment report; reports on investment capital settlement and audits; the competent agency’s decision on approval of results of settlement and auditing of investment capital (after the project is completed).

dd) Agreement on connection of the power plant to the national electricity system according to the connection plan of the power plant; agreement on SCADA/EMS, automatic protection relay system;

e) Loan agreements or any document legally binding the project owner and lending banks, plans or reality of disbursement of loans;

g) Agreement for supply of fuel to power plants specifying cost of fuel for generation of electricity, cost for transport of fuel and other charges, point of delivery and receipt of fuel, time limit for supply of fuel.

h) Documentary calculations about losses to transformer capacity and energy, transmission lines from the power plant to the point of connection with the national electricity system; calculations about auxiliary power in the power plant;

i) Documentary calculations about fuel loss rate of coal-fired power plant or heat loss rate of gas turbine power plant;

k) Electricity price plan is determined according to Sections 1 and 2, Chapter II of this Circular.

l) Other relevant documents;

2. A dossier of request for negotiation on power purchase agreement of existing power plants include:

a) Written request for negotiation on power purchase agreement;

b) Draft power purchase agreement specified in Appendix 3 attached to this Circular;

c) Existing documents of power purchase agreement;

d) Technical documents of the plant, technical figures of SCADA/EMS, automatic protection relay system, characteristic performance (PQ) of the assemblies till present time;

dd) Agreements for supply of fuel to power plants;

e) Electricity price plan is determined according to Sections 1 and 2, Chapter II of this Circular.

g) Audited financial statement of the power plant of the most recent year till the date of power purchase agreement negotiation;

Article 22. Dossiers of request for re-negotiation on electricity price, power purchase agreement and documents submitted for inspection of power purchase agreement

1. A dossier of request for re-negotiation on electricity price and power purchase agreement according to settled investment capital include:

a) Written request for re-negotiation on electricity price and power purchase agreement;

b) Decision on approval of total final investment capital of the project; reports on the project’s financial settlement and audits; the competent agency’s decision on approval of financial settlement and audits of investment capital;

2. Dossiers submitted for inspection of power purchase agreement:

a) Written request for inspection of power purchase agreement;

b) Draft power purchase agreement initialed by the two parties;

c) Tabular calculations of power purchase agreement price prepared in excel format;

d) Documentary calculations of power purchase agreement price specified in Article 21 of this Circular;

dd) Documentary explanations about amendments, supplements outside power purchase agreement template agreed by the two parties to be included in the power purchase agreement;

Article 23. Sequence to inspect power purchase agreement

After the negotiation on power purchase agreement closes, the Buyer shall be responsible for establishing dossier of request for inspection of power purchase agreement specified in Article 22 of this Circular and making the submission to the Electricity Regulatory Authority of Vietnam for inspection.

The Seller and Buyer shall be responsible for making reports and relevant explanations.

2. Within five working days since receipt of dossier of request for inspection of power purchase agreement, the Electricity Regulatory Authority of Vietnam shall be responsible for inspecting eligibility of the documentary requests and issuing a written request to the Buyer and Seller for supplements (if any) specified.

3. Within 30 working days since receipt of dossier of request for inspection of power purchase agreement, the Electricity Regulatory Authority of Vietnam shall be responsible for inspection and providing advice on power purchase agreement.

4. Within 30 working days since receipt of advice on inspection of power purchase agreement, the two parties shall be responsible for executing the power purchase agreement officially. In case the Electricity Regulatory Authority of Vietnam is yet to give official advice on the power purchase agreement after the time limit specified in Clause 3 of this Article, the two parties shall be allowed to sign the power purchase agreement officially according to agreed terms and conditions. The Buyer shall be responsible for sending 01 (one) copy of the signed power purchase agreement to the Electricity Regulatory Authority of Vietnam for filing and monitoring the implementation.

5. Power purchase agreement is deemed as inspected when the following requirements are met:

a) Electricity generation price of the power plant is within the cost frame promulgated by the Ministry of Industry and Trade;

b) Yearly price in the power purchase agreement is determined as conformable to the principles specified in Article 12 of this Circular;

c) Subject matters of the power purchase agreement is conformable to those of power purchase agreement template promulgated by the Ministry of Industry and Trade;

d) Amendments or supplements to the power purchase agreement are adequately explained in writing.

6. In case negotiated price of the power plant exceeds the cost frame promulgated by the Minister of Industry and Trade, the two parties shall be responsible for explaining items and expenses agreed during the negotiation to the Electricity Regulatory Authority of Vietnam. The Electricity Regulatory Authority of Vietnam shall be responsible for making the report to the Minister of Industry and Trade for consideration and handling issues beyond authority.

Article 24. Supplements and amendments to power purchase agreement

1. In case changes to regulations and policies promulgated by competent state agencies have caused adverse effects on legitimate interests of the Buyer and Seller, in reliance on proposals from the Seller or written requests from the Buyer, the Electricity Regulatory Authority of Vietnam shall be responsible for granting permission to the two parties for re-negotiation on electricity price. As for issues beyond authority, the Electricity Regulatory Authority of Vietnam shall be responsible for making the report to the Minister of Industry and Trade for consideration and handling. After receipt of written approval from the Ministry of Industry and Trade, the Electricity Regulatory Authority of Vietnam, the two parties shall negotiate to reach agreement and initialing the amendments and supplements to the previously signed power purchase agreement.

2. After the negotiation on the amendments and supplements closes, the Buyer shall be responsible for establishing and making submission of documentary requests to the Electricity Regulatory Authority of Vietnam for inspection. The dossier of request for inspection of amended and supplemented power purchase agreement include:

a) Initialed amended and supplemented power purchase agreement;

b) Documentary explanations about amendments and supplements to the power purchase agreement, and accompanied documentary evidence;

c) Tabular calculations about new power purchase agreement price prepared in excel format (in case of changes made to power purchase agreement price)

3. Time limit for negotiation and inspection of amended and supplemented power purchase agreement is instructed in Article 20, Article 23 of this Circular.

 

Chapter IV

IMPLEMENTATION PROVISIONS

 

Article 25. Responsibilities of the Electricity Regulatory Authority of Vietnam

1. To carry out inspection, give advice on power purchase agreement and supplements to power purchase agreements of power plants;

2. To provide instructions and handle difficulties arising during the negotiation on power purchase agreement between the two parties

3. Annually, to calculate power purchase agreement price specified in Appendix 1 of this Circular in reliance on opinions from the units on input parameters, make the submission to the Minister of Industry and Trade for consideration and decision on amendments or supplements (if any);

4. To settle disputes arising during the implementation of power purchase agreement in case the two parties agree settlement of the dispute take place at Electricity Regulatory Authority of Vietnam;

5. After receipt of the report from the Vietnam Electricity, the Electricity Regulatory Authority of Vietnam shall carry out inspection, working out and making the report to the Ministry of Industry and Trade for consideration and decision on payment of exchange differences of the power plant.

6. Before January 31 annually, to summarize the implementation of power purchase agreement in the preceding year between Vietnam Electricity and generating units, difficulties arising during the implementation of power purchase agreement, and make the report to the Minister of Industry and Trade for consideration and decision on handling of such difficulties;

Article 26. Responsibilities of the Vietnam Electricity

1. To make submission to the Electricity Regulatory Authority of Vietnam for inspection of power purchase agreement specified, be responsible for ensuring accuracy, appropriateness and eligibility of provided figures and documents;

2. Before January 31 annually, to take the initiative in cooperating with the project owner in calculating exchange differences during the implementation of power purchase agreement in the preceding year specified in Clause 1, Article 13 of this Circular and make the report to the Electricity Regulatory Authority of Vietnam for inspection;

3. Annually, carry out considerations and make proposals to the Electricity Regulatory Authority of Vietnam for revising input parameters for calculation of power purchase agreement price specified in Appendix 1 of this Circular and other subject matters of this Circular (if any);

4. Before January 15 annually, to make the report to the Electricity Regulatory Authority of Vietnam on the implementation of power purchase agreement in the preceding year with generating units, difficulties arising during the implementation of power purchase agreement, and propose handling solutions (if any)

Article 27. Responsibilities of the project owner

1. The project owner shall be responsible for:

a) Carrying out negotiation and signing power purchase agreement specified of this Circular;

b) Providing adequate information, ensuring accuracy, appropriateness and eligibility of figures and documents provided to relevant units, agencies during the negotiation and inspection of power purchase agreement;

2. Since the first assembly is put into commercial operation, on a quarterly basis, the project owner shall make the report to the Electricity Regulatory Authority of Vietnam on the implementation of payment of electric bills according to the form specified in Appendix 4 of this Circular;

3. Before January 15 annually, the project owners of power plants shall make the report to the Electricity Regulatory Authority of Vietnam on the implementation of power purchase agreement in the preceding year with the Vietnam Electricity, difficulties arising during the implementation of power purchase agreement, and propose handling solutions (if any);

4. Before January 31 annually, the project owner shall take the initiative in cooperating with the Vietnam Electricity in calculating exchange differences during the implementation of power purchase agreement in the preceding year specified in Clause 1, Article 13 of this Circular and make the report to the Electricity Regulatory Authority of Vietnam for inspection;

Article 28. Implementation provisions

1. This Circular takes effect on February 03, 2015 and replaces the Ministry of Industry and Trade’s Circular No. 41/2010/TT-BCT dated December 14, 2010 on regulating method of electricity price determination; sequence and procedures for construction and promulgation of electricity generation price frame and approval of power purchase agreement.

2. With regard to power purchase agreement price of the power plant that is still under negotiation before the effective date of this Circular according to the method as instructed in the Ministry of Industry and Trade’s Circular No. 41/2010/TT-BCT dated December 14, 2010 on regulating method of electricity price determination; sequence and procedures for construction and promulgation of electricity generation price frame and approval of power purchase agreement, the two parties shall the report to the Ministry of Industry and Trade, the Electricity Regulatory Authority of Vietnam for consideration and specific instructions.

3. Any difficulties arising in the courses of implementation should be promptly reported to the Ministry of Industry and Trade for consideration and supplements as appropriate./.

For the Minister

The Deputy Minister

Cao Quoc Hung

 

 

 

 

APPENDIX 1

PARAMETERS FOR THE CALCULATION OF POWER PURCHASE AGREEMENT VALUE
(Attached to the Circular No. 56/2014/TT-BCT dated 19 December 2014 by Minister of Industry and Trade)

 

 

 

 

APPENDIX 2

PROJECT FINANCE ANALYSIS TABLES
(Attached to the Circular No. 56/2014/TT-BCT dated 19 December 2014 by Minister of Industry and Trade)

 

Table 1 – Business results forecast

Unit: …

Notes:

- Electricity sales income has not incurred value added tax, water resource tax, forest environment fee and other taxes and fees (if any).

- Table 01 is executed from the year when incomes arise.

 

Table 2 – Financial accumulation flow and financial norms

Unit: …

Notes:

- Electricity sales income has not incurred operational and maintenance expense, value added tax, water resource tax, forest environment fee and other taxes and fees (if any)/

- Table 02 is executed from the year when constructional works commence.

 

                                                   APPENDIX 3

SAMPLE AGREEMENT FOR PURCHASE OF POWER
(Attached to the Circular No. 56/2014/TT-BCT dated 19 December 2014 by Minister of Industry and Trade)

 

SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Vietnam
---------------

 

 

 

POWER PURCHASE AGREEMENT

POWER PLANT OF …

 

 

Between

 

COMPANY [Name of the company]

(VENDOR)

 

- and -

 

VIETNAM ELECTRICITY CORPORATION

(BUYER)

 

 

 

AGREEMENT NO. … /20…/HD-NMD-[Power plant’s name]

Hanoi, … [month[/ 20 ...

 

 

TABLE OF CONTENTS

Article 1. Definitions

Article 2. Effect and term of agreement

Article 3. Sale and purchase of electricity

Article 4. Commitments

Article 5. Vendor’s duties prior to the date of commercial operations  

Article 6. Responsibilities for establishing connections and electricity measurement system

Article 7. Power plant dispatch and operation

Article 8. Invoicing and payment

Article 9. Breach of agreement and legal remedies

Article 10. Termination and suspension of agreement

Article 11. Legal liability limit and compensation for damages

Article 12. Indemnity

Article 13. Settlement of disputes

Article 14. Restructuring of electricity sector and transfer of rights and duties

Article 15. Retention of documents and provision of information

Article 16. Other expenses

Article 17. Authorized representatives and exchange of information

Article 18. Confidentiality

Article 19. Other stipulations

Appendix I. PRIMARY PARAMETERS OF THE POWER PLANT

Appendix II. MEASUREMENT SYSTEM AND COLLECTION OF DATA

Appendix III. AGREEMENT ON OPERATIONAL CHARACTERISTICS

Appendix IV. AGREEMENT ON SCADA/EMS SYSTEM, COMMUNICATION, PROTECTIVE AND AUTOMATIC RELAYS

Appendix V. SELLING PRICE AND PAYABLES FOR ELECTRICITY

Appendix VI. MAIN PARAMETERS FOR PRICING OF ELECTRICITY  

Appendix VII. TIME POINTS IN PROJECT SCHEDULE  

Appendix VIII. PROCEDURE FOR RELIABLE OUTPUT TEST

 

 

 

THE SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
_________

POWER PURCHASE AGREEMENT

 

Pursuant to the Law on electricity dated 03 December 2004 and the Law on amendments to Electricity Law dated 20 November 2012;

Pursuant to the Commercial Law dated 14 June 2005;

Pursuant to the Government’s Decree No. 137/2013/ND-CP dated 21 October 2013 on detailing the enforcement of certain articles of the Law on electricity and the Law of amendments to Electricity Law

Pursuant to the Circular No. 30/2014/TT-BCT dated 02 October 2014 by Minister of Industry and Trade on regulating the operation of the competitive power generation market;

Pursuant to the Circular No. …./2014/TT-BCT dated … by Minister of Industry and Trade on regulating the method for pricing of power generation and the procedure for inspection of power purchase agreements;

As per the parties' demands for sale and purchase of electricity,

As of … , at … .

The parties include:

Vendor: …

Address: …

Telephone: …                                   Fax: …

Tax code: …

Account: ...                                       Bank: ...

________________________________________________________

Represented by: …

Position: …                                                     as authorized by …

… according to the letter of authorization

no … dated …

Buyer: Vietnam Electricity Corporation

Address: ...

Telephone: …                                   Fax: …

Tax code: …

Account: ...                                       Bank: ...

________________________________________________________

Represented by: …

Position: …                                                     as authorized by …

… according to the letter of authorization

no … dated …

The parties agree to enter the Agreement for purchase of power from the power plant on the following terms:

Article 1. Definitions

In this agreement, the following phrases and words are construed as follows:

1. Vendor refers to … [Company] that owns the Power plant of …

2. Buyer refers to Vietnam Electricity Corporation.

3. Trading cycle refers to a 1-hour cycle for calculation of market electricity price, starting from the first minute of each hour.

4. The available output announced by the Vendor is the readily attainable output of a generator or power plant at a definite point of time.

5. Connection point is a site for the power generation company’s connection of equipment, power grids and power plant's facilities to the National power system.

6. Point of electricity delivery is a site for the measurement of the amount of Vendor's electricity delivered to the Buyer.

7. The operator of national electric power system and electricity market commands and controls the processes of generation, transmission and distribution of electricity in the national power system and manages transactions in the electricity market.

8. Market power output price refers to the price of a unit of active power output in a trading cycle, for the calculation of the payables for power outputs by power generation companies in the electricity market.

9. Market electricity price is the price of a unit of electricity in each trading cycle, for the calculation of payables for electricity produced by power generation companies in the electricity market.

10. National power system consists of electric power generation equipment, power grids and ancillary equipment jointly connected and unanimously controlled on nation-wide scale.

11. Primary measurement system is composed of measurement equipment (meters, measurement current transformers, measurement transformers) and secondary circuits connected to the said equipment. The system is installed at the parties' agreed locations to set firm basis for the calculation of the production of electricity delivered.

12. Backup measurement system comprises every measurement equipment (meters, measurement current transformers, measurement transformers) and secondary circuits connected to the said equipment. The system is installed at the parties’ agreed locations for testing and backing up the primary measurement system. It comprises equipment independent from but technically equivalent to those of the primary measurement system.

13. Agreement refers to this power purchase agreement and its appendices and amendments.

14. Dispatching order is an order for real-time steering and control of electric power system’s operations.

15. Day refers to a day in Gregorian calendar.

16. The generator's date of commercial operation means the date when the power plant's generator is ready to sell electricity to Buyer upon the fulfillment of the following requirements:

a) The power plant completes the initial reliable output test on electricity generators of a thermal power station or the acceptance test of full-load power output of generators in a hydroelectric power plant;

b) The power plant is licensed to conduct electricity-related activities in the sector of power generation;

c) The parties calibrate meters to enable price-based gross payments in the competitive power generation market.

17. The power plant’s date of commercial operation refers to the date when the last generator starts commercial operations and the power plant is licensed to conduct electricity-related activities for all generators in the power generation market.

18. Power plant refers to the Power plant [name of Power plant] with the maximum established output of … MW, including … generators at [power plant's location], each of which has an output of … MW.

19. The electricity sector’s technical regulations and standards include obligatory technical regulations issued by Vietnam's competent authorities and rules, standards and practices observed by international organizations and enforced by other nations in correspondence in line with the laws of Vietnam.

20. Connection equipment refers to power transmission lines, measurement equipment system, control devices, protective relay, circuit breakers, information and communication system and buildings synchronized for power plants' linkage with points of connection.

21. Competitive power generation market is the first-level electricity market as defined in point a, section 1, Article 18 of the Electricity Law and operates according to the Ministry of Industry and Trade’s regulation on the operation of the competitive power generation market.

Article 2. Effect and term of agreement

1. Effect of agreement

This agreement comes into force upon the parties’ authorized representatives’ official signing of the agreement, unless otherwise stated.

2. Term of agreement

The term of the agreement, unless extended or terminated early, is stipulated as follows:

a) The agreement, for power plants newly established or bearing duties to settle long-term debts from investments in their construction, commences upon its effect and expires after one of the following points of time:

(i) The closing date of the competitive power generation market as per competent governmental authorities’ decisions;

(ii) 10 years from the initial date of the power plant’s commercial operations, notwithstanding the duration of force majeure, save events defined in section 4, Article 12 of the agreement.

b) The agreement, for power plants bearing no repayment duty over long-term debts from investments in their construction, commences upon its effect and expires on the closing date of the competitive power generation market according to competent governmental authorities’ decisions.

Article 3. Sale and purchase of electricity

1. The agreement price is defined in clause I, Appendix V of the agreement.

The parties agree to set the annual fixed price FCj (VND/kWh) upon the expiration of agreement to the end of the economic life of a thermal power station or a hydroelectric power plant, according tosection 1.2 or section 2.2, respectively, in clause I, Appendix V of the agreement. Such fixed price is a basic parameter for the pricing of power plant’s electricity in subsequent power purchase agreements.

2. The contractual production of electricity produced is defined in clause II, Appendix V of the agreement.

3. Buyer's duty is making following payments to Vendor for electricity on monthly basis:

a) The sum of differences as computed by Vendor according to clause III, Appendix V of the agreement;

b) Total market-based payables as per the monthly payment list (including payments for market electricity, market power output and other market-based payables) as released by the operator of national electric power system and electricity market;

c) All other payables such as deferral interest and payment adjustments (if any);

d) Regulated taxes and fees, including those arising due to competent governmental authorities' amendments to laws and regulations (if any).

The parties agree to settle payables arising owing to the adjudication of disputes according to section 4, Article 8 of the agreement.

4. During the intermission of the electricity market or the power plant's seclusion from the electricity market, the payables for electricity during the interruption of market-related activities are specified subject to the agreement price according to clause I, Appendix V of the agreement.

Article 4. Commitments

The parties undertake that:

1. Each party is legally established to operate under the laws of Vietnam and has sufficient power to enter and execute the agreement and possess adequate business capacities and assets to execute its duties specified in agreement.

2. Each party's signing and execution of the agreement do not violate its corporate regulations, the laws, other agreements that it engages in, and a court's rulings or verdicts against such party.

3. The parties’ signing and execution of the agreement abide by their electrical operating licenses as issued by competent authorities and relevant laws.

4. The parties are not defendants in a lawsuit, whose result may remarkably alter agreement parties’ financial capacities or ability to execute their contractual duties or the validity and effect of agreement, in a court, commercial arbitration or before a competent governmental authority.

5. The parties undertake to execute precisely the duties and contents in this agreement.

Article 5. Vendor’s duties prior to the date of commercial operation

1. Requirements on licenses and written approvals

a) Vendor is responsible for going through regulated formalities for competent authorities’ issuance of licenses and written approvals necessary for the construction and operation of the power plant. Vendor undertakes to maintain compliance and conditions of such licenses according to the laws during the effective term of the agreement;

b) In 30 days’ time upon the initial date of commercial operations of the generators and power plant, Vendor bears the duty to provide Buyer with valid copies of licenses and documents as defined in clause II, Appendix VII of the agreement.

2. Reporting of time points in the project schedule

a) Vendor guarantees time points in the project schedule according to clause I, Appendix VII of the agreement;

b) By the 05th of the first month of a quarter, Vendor bears the duty to make and send the report on the power plant's building progress with valid copies to Buyer to evidence and assess the advancement of the project as per commitments and to propose solutions on maintaining time points of the project.

3. Connection, test and operation

Prior to the date of commercial operation, Vendor bears the duty to connect, test and operate the power plant and connection equipment according to the electricity sector’s technical regulations and standards and Ministry of Industry and Trade's regulation on power transmission system. Moreover, Buyer shall be given valid copies of the test results of the power plant.

4. Date of commercial operation

a) Vendor bears the duty to realize the date of commercial operation according to the project's time points as per the parties' stipulations in Appendix VII of the agreement or subsequent amendments. Vendor bears the duty to inform Buyer officially in writing of the former's ability to realize the date of commercial operation no later than 03 months prior to the date of each generator's commercial operation. Subsequently, Vendor must inform Buyer in writing of the former's realization of the date of commercial operation. Vendor is deemed to fail the date of commercial operation if Buyer does not receive a written notice of the realization of the commercial operation date and documents as stated in Appendix VII of the agreement;

b) If a generator's date of commercial operation fails, Vendor is allowed to propose Buyer in writing to reschedule such date. Such proposal must specify reasons for rescheduling. Buyer must respond in writing to Vendor about rescheduling no later than 10 days upon the former's receipt of the written proposal for rescheduling. Buyer, if rejecting Vendor’s rescheduling proposal, must specify reasons.

Article 6. Responsibilities for establishing connections and electricity measurement system

1. Responsibilities for establishing connections

Vendor is responsible for:

a) Negotiating, investing, managing and operating the equipment for connection, transmission and delivery of electricity to Buyer at points of delivery according to Ministry of Industry and Trade’s regulation on power transmission system and relevant technical regulations and standards of the electricity sector;

b) Investing, installing, managing, operating and maintaining the power plant’s system equipment for collection, transmission of data, automatic control and protective relays for the power plant’s connection to SCADA/EMS system of the operator of national electric power system and electricity market. Such connection facilitates the operation of the power plant in the electricity market.

2. Measurement system

a) Vendor is responsible for investing, installing, managing, operating, maintaining and inspecting the equipment of the primary and backup measurement systems on annual basis according to Ministry of Industry and Trade’s regulation on electricity measurement. Competent or authorized organizations shall inspect the measurement equipment or verify the precision of such equipment. The measurement equipment must be secured with lead seal after the inspection;

b) Each party can request additional or random inspection of measurement equipment and system, if necessary. Vendor is responsible for organizing inspections at Buyer’s request. If random inspection detects measurement equipment’s deviations higher than the permissible limit, Vendor must pay for the random inspection. If deviations fall within the permissible limit, the requesting party incurs inspection fees;

c) Vendor's duty is to inform Buyer of the result of the inspection of measurement equipment. Vendor's duty is to inform Buyer in advance of the inspection of measurement equipment. Buyer is responsible for assigning its witness of the process of seal removal, inspection and lead sealing of the meters;

d) If measurement equipment's deviations exceed the permissible limit according to the Ministry of Industry and Trade’s regulation on electricity measurement, Vendor is liable for adjusting or replacing such equipment. If one of the parties considers a meter damaged or not functional, it must promptly inform the other party. Vendor bears the duty of inspection and repair;

dd) The production of electricity traded by Buyer and Vendor is defined according to the method of delivery in Appendix II of the agreement.

If the primary measurement system does not function properly or its deviations, as found by an inspection, exceed the regulated precision level, the production of electricity traded during such events is defined by the backup measurement system. If the backup measurement system fails or generates deviations, during an inspection, higher than the permissible limit, the production of electricity traded is calculated as follows:

(i) If the primary measurement system functions but generates deviations higher than the regulated precision level, the production of electricity traded is determined by the primary measurement system and interpreted to an equivalent value of electricity at the deviation rate of 0%. According to the adjusted result of measurement agreed by the parties, Vendor bears the duty to calculate the payables that one of the parties owes to the other. Such payables arise during the measurement system’s inaccurate time.

(ii) If the primary measurement system does not function, the parties consider the problematic conditions and actual deviations of measurement systems according to the inspecting entity’s records and figures approved by the parties to unanimously consent to a method for calculating the production of electricity to be adjusted during the time of inaccurate measurement. If the parties fail to agree to a method and the production of electricity trade requires adjustment, the parties are responsible for settling disputes according to Article 11 of the agreement.

e) If the measurement equipment burns or breaks down, Vendor is responsible for having it replaced or repaired in the shortest time to make the equipment abide by technical requirements and resume to work. The replacements or repaired equipment, before used, must be inspected according to regulations.

Article 7. Power plant dispatch and operation

1. The duty to register a method of mobilization

Vendor bears the duty to register the method for mobilizing each of the power plant's generators with the operator of national electric power system and electricity market, according to the Electricity Regulatory Authority of Vietnam's regulations on the procedures for establishing and approving the plan for the operation of the national power grids, Ministry of Industry and Trade's power transmission system regulations and power system dispatch procedures, and the operational cooperation procedures between Vendor and the operator of electric power system and electricity market. Buyer shall also receive a written copy of such mobilization method registration.

2. Operation of Power plant

a) Vendor is responsible for conforming to the regulations on power plant dispatch and operation according to Ministry of Industry and Trade’s regulations on power transmission system, operation of competitive power generation market and power system dispatch procedures, electricity sector’s technical regulations and standards and relevant documents. Vendor bears the duty to maintain and operate the power plant’s generators according to technical specifications in Appendix I and Appendix III of the agreement;

b) Vendor bears the duty to install, operate and maintain the equipment to synchronize the power plant with the national power grids. Vendor is responsible for conforming to the Ministry of Industry and Trade’s regulation on power transmission system, electricity sector’s technical regulations and standards and other dispatch regulations upon the synchronization of the power plant with the national power grids;

c) If the methods for operation of national power grids bring threats to the power plant's primary equipment, cause injury, fatality or equipment damages, Vendor is allowed to disconnect the generators from the power system.

Article 8. Invoicing and payment

1. Invoicing and payment for electricity

a) By the fifth of each month, Vendor informs Buyer in writing of the payables for electricity with the immediate preceding month’s payment documents.

Payment documents prior to the participation in the competitive power generation market include the summary of contractual payables, written confirmation of meter-based production of electricity, and other relevant documents (if any).

Payment documents after the participation in the competitive power generation market include detailed calculation sheets on all payment differences and other payables arising (if any), and taxes and fees that Vendor incurs according to clause III, Appendix V of the agreement and relevant documents enclosed (if any).

b) In 03 working days’ time upon receiving the payment documents, Buyer verifies the accuracy of such documents. Buyer, if detecting errors, informs Vendor in writing for the latter's correction of payment documents. Buyer, after inspecting the payment documents, informs Vendor in writing of the former's endorsement of such documents;

c) By the twentieth of each month, Vendor must issue payment invoices to Buyer. Such payment invoices are made in conformity to the regulations by Ministry of Finance;

d) Buyer bears the duty to transfer all amounts invoiced for the immediate preceding month’s electricity through banks, by the deadline of payments as agreed by the parties. Buyer incurs bank transfer fees;

dd) If data for invoicing is insufficient upon the release of a payment invoice (in the absence of a payment list from the operator of national electric power system and electricity market), Vendor is allowed to calculate the temporary payables for electricity by rationally estimating missing figures. The price of electricity for such temporary payments equals 80% of the agreement's price. The adjusted payables constitute deductibles for the month when official data is available.

2. Payment disputes

a) If Buyer does not consent to parts or all payables invoiced, it must inform in writing of the amounts invoiced and reasons of its disapproval prior to the payment deadline. Buyer bears the duty to settle all undisputed payables by or on the due date of payment;

b) In 15 days’ time upon receiving the notice of payment dispute, Vendor must respond to Buyer officially in writing. If the parties fail to resolve payment disputes, one of the parties can settle disputes according to Article 13 of the agreement;

If disputes originate from the content of the payment list of the operator of national electric power system and electricity market, the parties’ actions shall be governed by the stipulations on resolutions for disputes in Ministry of Industry and Trade’s regulations on the operation of electricity market.

c) If the party does not complains in writing about the payables in 30 days from the issue date of an invoice, it is deemed to waive its rights to complain about the payables invoiced.

3. Calculation of interest

Imposition of interest:

a) The monthly payables for electricity deferred after the deadline according to point d, section 1 of this Article;

b) The payables arising according to a decision on dispute settlement according to Article 13 of the agreement;

c) The adjusted payables for monthly electricity according to Point dd, section 1 of this Article.

Interest accrues on monthly basis from the day immediately following the payment deadline to the actual date of payment fulfillment. The rate of such interest equals the average rate of 12-month deposit’s accrual interest rates for Vietnamese currency, as defined by four commercial banks including Vietcombank, Vietinbank, BIDV and Agribank or legitimate successors of such banks on the due date of the invoice, plus an annual interest margin rate of 3%.

4. Deductibles

The parties may deduct debts, disputed amounts settled, adjusted amounts and monthly interest from the monthly payables for electricity in the nearest month’s invoice.

Article 9. Events affecting the agreement and legal remedies

1. The following events affect Buyer’s execution of the agreement.

a) The events related to Vendor’s dissolution or bankruptcy:

(i) Vendor is dissolved (except for pre-merger or pre-consolidation dissolution);

(ii) Vendor fails to settle due debts;

(iii) Vendor transfers or merges its entire entity with the creditors or with another entity for creditors’ benefits;

(iv) A court issues its rulings on the bankruptcy procedure against Vendor.

b) Vendor commits serious violations of its duties as stated in the agreement and fails to correct such violations in 90 days upon Buyer's notice of such violations.

c) Vendor is suspended by competent authorities’ decisions.

2. The following events affect Vendor’s execution of the agreement

a) The events related to Buyer’s dissolution or bankruptcy:

(i) Buyer is dissolved (except for pre-merger or pre-consolidation dissolution);

(ii) Buyer fails to settle due debts;

(iii) Buyer transfers or merges its entire entity with the creditors or with another entity for creditors’ benefits

(iv) A court issues its rulings on the bankruptcy procedure against Buyer;

b) Buyer commits serious violations of its duties as defined in the agreement and fails to correct such violations in 90 days upon Vendor’s notice of such violations;

c) Buyer is suspended by competent authorities' decisions.

3. Legal remedies

a) If an event affecting the party’s execution of the agreement occurs, the affected party has the right to enforce the legal remedies, as stated in Article 10 of this agreement, against the perpetrating party;

b) Legal remedies in this agreement do not nullify each other or obstruct other remedies.

Article 10. Termination and suspension of agreement

1. Termination of agreement by agreement

The parties can engage in a written agreement on early termination of agreement.

2. Unilateral termination of agreement

a) If an affecting event, as defined in Point a, Point b, Section 1 or Point a, Point c, Section 2, Article 9 of the agreement, occurs, continues and affects one of the agreement parties, the affected party is allowed to unilaterally terminate the agreement 90 days after its delivery of a written notice to the other party;

b) If force majeure affects one party and continues in at least 180 days, the other party is allowed to unilaterally terminate the agreement 30 days after its delivery of a written notice;

c) If an event affecting the party’s execution of the agreement, as defined in Point b, Section 1 or Point b, Section 2, Article 9 of the agreement, occurs, the affected party is allowed to unilaterally terminate the agreement 30 days after its delivery of a written notice.

3. Suspension of agreement

Buyer is allowed to suspend the agreement, after informing Vendor, if the Electricity Regulatory Authority of Vietnam suspends Vendor from participating in the competitive power market or by competent authorities from operating in the power generation sector. Agreement suspension time must not exceed the duration of the suspension of participation in the competitive power generation market or operation in the electricity sector.

Article 11. Compensation for damages

1. The violating party is responsible for compensating the affected party for damages caused by the former's violations. Damages include losses, damages or costs that the affected party has incurred while executing its rights and duties provided in the agreement. The method for calculation of damages is governed by the Civil Law.

2. The compensated party, if claiming for damages, shall promptly inform the compensating party in writing of the nature of the events for damage claims. The compensated party's deferral of its notices shall not impinge on the compensating party’s duties of compensation, unless the compensating party suffers from actual damages due to the compensated party’s delay.

Article 12. Indemnity

1. The violating party is exempt from liabilities in the following events:

a) An event of indemnity, as agreed by the parties, occurs;

b) One party's faults cause all of the other's violations;

c) One party commits violations when fulfilling a competent governmental authority's decisions, which the parties could not be aware of upon their signing of the agreement;

d) Force majeure occurs

Force majeure is unavoidable beyond one party’s control and obstructs or delays that party’s execution of its duties provided in the agreement, partly or fully, despite its implementation of rational measures.

Force majeure obstructing or delaying the parties' execution of their agreement duties must overwhelm the affected party's reasonable control and derive from none of its faults or negligence. Moreover, the affected party fails to avoid such events despite its implementation of reasonable solutions, practices, procedures and standards. Such events include but are not limited to:

i) A decision by a court or competent authority causing adverse effects on one party’s execution of its duties as provided in the agreement;

ii) Natural disasters including fire, explosion, drought, flood, volcanic eruption, earthquake, landslide, tide, storm, tornado, hurricane or similar events;

iii) Riot, demonstration, revolt, insurgency, war activities whether war is declared or not, opposition, terrorism, sabotage, embargo, blockade, quarantine or similar events;

iv) Vendor’s power plants or assets are nationalized, deprived or seized according to competent governmental authorities' decisions;

v) Vendor is not licensed by competent authorities or fails to obtain written approvals necessary despite its fulfillment of all duties according to the laws related to the said licenses and written approvals.

2. Announcement and endorsement of indemnity

a) The violating party must inform the other in writing of exemptions and possible consequences;

b) When indemnity ends, the violating party must immediately inform the other. If the violating party fails or delays its announcements to the other party, it must compensate for damages caused.

c) The violating party bears the duty to evidence its indemnity with the affected party.

3. Indemnity and refusal to execute the agreement in force majeure

a) The party committing violations due to force majeure is responsible for regularly reporting to the other party about the former’s implementation of solutions against force majeure or information reasonably requested by the other party. Such reports shall evidence the violating party's adducing of force majeure. The other party must be informed of force majeure's end time in 48 hours from the finis of such events, unless loss of communication occurs;

b) The party affected by force majeure is only excused for its non-execution or delay of agreemented duties due to such events after it release notices and executes duties of recovery according to point a of this Article;

c) If force majeure obstructs one party's execution of its contractual duties in at least 180 days, one of the parties is allowed to unilaterally terminate the agreement according to point b, section 2, Article 10 of this agreement.

Article 13. Settlement of disputes

1. If disputes between the agreement parties arise, the party provoking disputes must inform the other party in writing of the contents of such disputes. The parties are responsible for discussing solutions against disputes in 60 days upon the date of the notice from the party raising such disputes. The parties are responsible for discussing disputes over payments in 15 days. The parties are allowed to negotiate and execute an extension of dispute settlement time in writing.

2. If the parties fail to settle disputes through discussions within the time limit as per section 1 of this Article, the parties shall agree to forward their disputes to the Electricity Regulatory Authority of Vietnam or other authorities as unanimously selected by the parties to settle disputes according to relevant laws.

Article 14. Restructuring of electricity sector and transfer of rights and duties

1. Restructuring of electricity sector and transfer of Buyer’s rights and duties

The parties agree that Buyer may be reorganized, restructured, dissolved or gradually deprived of its sole capacity of purchasing electricity for the conversion of the electricity sector's model to that of the competitive power market according to the pathway approved by Prime Minister or subsequent written amendments. When a competent governmental authority issues a decision on reorganizing, restructuring or dissolution, Buyer is allowed to assign all or parts of its contractual rights and duties without Vendor's consent to one or many successors, which are defined by the competent governmental authority. Such successors are responsible for executing Buyer’s legal rights and duties according to the laws.

Vendor must approve in writing all of Buyer’s assignment or relegation of its rights and duties from this agreement.

2. Transfer of Vendor’s rights and duties

Vendor is only allowed to assign its rights and duties from this agreement to successor(s) after obtaining Buyer’s written consent. Buyer cannot reject Vendor’s assignment or relegation without a reason. However, Vendor can relegate or assign parts or all of its contractual rights and duties on financing or financial arrangements for the power plant without Buyer’s agreement. The effect of this agreement survives to continue the benefits and duties of Vendor's successors, assignees or relegated entities.

3. Transition to the competitive wholesale market

If the wholesale market or other models as per competent governmental authorities' decisions replace the competitive power market during the term of this agreement, the parties are responsible for negotiating changes or replacements of this agreement in consonance with the new electricity market structure on the condition that the parties' economic values from the agreement remain unaffected.

Article 15. Retention of documents and provision of information

1. Retention of documents

The parties are responsible for retaining documents, data, materials or information evidencing the accuracy of invoices, prices or calculations as per the agreement or proving the parties' conformity to the agreement.

2. Provision of information

Each party is responsible for providing the other party with figures, materials or papers necessary at reasonable level to evince the accuracy of payment invoices, pricing formulas or calculations as per the agreement or verify the parties' abidance by the agreement.

Article 16. Other expenses

Each party is responsible for paying taxes and fees or settling debts arising during its execution of the agreement. The parties agree that this agreement is not inclusive of expenses for power transmission, power distribution, connection or similar expenses. Each party is responsible for covering such expenses according to current regulations.

Article 17. Authorized representative and exchange of information

1. Authorized representative

The authorized representatives of the agreement parties are:

•  
•  
•  

2. Exchange of information

a) Notices, invoices or essential information exchanged during the enforcement of this agreement must be executed in writing. Their issue dates and relation to the agreement must be clearly specified. The original of a fax must be sent by pre-paid post. Notices, invoices or information must be delivered to the following addresses:

Vendor: _________________________________

•  

Buyer: _________________________________

•  

b) Notices, invoices or information sent as per point a of this Section are deemed received:

(i) when delivered by hand; or:

(ii) when proof of delivery by guarantee post is signed; or:

(iii) when a fax is actually received and the sender attains a confirmation of no fax delivery errors; or:

(iv) when a regular postage's arrival is confirmed.

Article 18. Confidentiality

Each party bears the duty to maintain confidentiality of information and documents given by the other party as per the agreement. Each party shall not disclose, publicize or exploit such information and documents for any purposes save the execution of its contractual duties. Exceptions are:

1. Documents and information are publicized or exploited according to the laws.

2. Documents and information are demanded by competent authorities.

3. Documents and information are announced or publicized by entities outside the agreement.

Article 19. Other stipulations

1. Amendments

Every amendment to the agreement must be executed in writing. Electricity Regulatory Authority of Vietnam shall inspect such amendments and provide its comments in writing.

2. Completion of agreement

This agreement is the final complete agreement between the parties and replaces all previous discussions, information and correspondences arising prior to the signing of this agreement.

3. Third party

This agreement only benefits its parties and does not constitute any benefits or duties for a third party.

4. Void of joint venture

This agreement does not constitute a joint venture or association between the parties or impose any legal duty or liability related to a joint venture or association on any of the parties. None of the parties is allowed to engage in or represent the other party to engage in an agent agreement or act as a representative to perform duties against the other party.

5. Waiver of rights

One party's relinquishment of its contractual duties must be executed in writing and endorsed by its authorized representative’s signature. One party's non-execution or deferral of its rights from this agreement shall not be construed as its abnegation of such rights.

6. Execution of remaining duties

Termination, closure or expiration of agreement does not end the parties’ execution of their remaining duties as per the agreement.

7. Governing law

The agreement is interpreted and executed as per the laws of Vietnam.

8. Severability

If a part of the agreement does not correspond with the laws or becomes void as per a competent government authority’s decision, other parts of the agreement sustain effect on the condition that remaining parts constitute sufficient contents without the ineffectual part.

This agreement is executed into 09 equally valid originals. Each party retains 04 originals. Vendor is responsible for sending one original to the Electricity Regulatory Authority of Vietnam.

 

 

 

 

Appendix I

PRIMARY PARAMETERS OF THE POWER PLANT

(Attached to the Agreement No. ... dated ...)

This includes description, charts and technical specifications of the power plant

1. Turbine

a) Quantity

b) Type

c) Manufacturer

2. Boiler (in a thermal power station)

a) Quantity

b) Boiler maximum continuous rating

c) Steam pressure

d) Temperature of saturated steam in steam drum

dd) Temperature of superheated steam

e) Temperature of water filtered and supplied

g) Boiler’s output

h) Fuel consumption

i) Temperature of heated air

k) Temperature of exhaust gases

3. Electric generator

a) Quantity

b) Type

c) Generator’s output (MVA)

d) Output voltage (kV)

dd) Cosj

e) Rotations (per minute)

g) Frequency

h) Supplier

4. Transformer

a) Quantity

b) Voltage (MVA)

c) Transformer ratio

d) Wiring diagram

dd) Short-circuit voltage Uk

e) Type (Technical description of the transformer)

5. Governing and excitation systems

6. Electricity distributor and breaker

a) Breaker for … kV

- Quantity

- Type

b) Disconnector switch for … kV

- Quantity

- Type

c) Current transformer for … kV

- Quantity

- Type

d) Voltage transformer for … kV

- Quantity

- Type

dd) Lightning arrester for … kV

- Quantity

- Type

e) Capacitor and high-frequency choke

- Quantity

- Type

g) Protective relay and automatic control system, ancillary equipment system

7. Connection to the national power grids

a) Connection line

b) Type of connection lines

c) Rated voltage (… kV)

d) Conductor

dd) Anti-lightning cord

e) Circuit length

* The project owner shall update parameters on the date of commercial operation

 

 

 

Appendix II

MEASUREMENT AND DATA COLLECTION SYSTEM

(Attached to the Agreement No. … dated …)

I. Location and features of the measurement system

1. Location for the installation of the measurement system:

Primary and backup measurement systems are installed at the power plant according to the agreement no ... by ... on technical design of electrical measurement system. (which is an appendix of the agreement).

2. The measurement system’s features must conform to the Circular by Ministry of Industry and Trade on electrical measurement.

1. Technical requirements for the measurement system

Technical requirements for measurement equipment, measurement circuit, lead seal method and meters' data gathering and reading system must abide by the Circular by Ministry of Industry and Trade on electrical measurement.

III. Location for measurement

The parties agree to use the power plant’s current measurement spots as follows:

IV. Method for the calculation of the production of electricity delivered

1. On the first of each month, the parties' legal representatives shall record and confirm the meters' indicators at 0 o'clock on the first of the month and the immediate preceding month’s production of electricity delivered in writing.

a) The following formula defines the production of electricity delivered by Vendor to Buyer in a billed month:

Including:

AG,i:  The relevant production of electricity outward at the measurement spot i of the primary measurement system in the month;

AG:  The production of electricity that Buyer pays to Vendor in the billed month (kWh)

b) The following formula defines the production of electricity that Vendor receives from the national power grids in a billed month:

Including:

AN,i: The relevant production of electricity inward at the measurement spot i of the primary measurement system in the month;

AN: The production of electricity that Vendor pays for ... [power corporation] according to the electricity selling price list for industrial customers as per competent governmental authorities’ regulations (kWh).

 

 

 

Appendix III

AGREEMENT ON OPERATIONAL CHARACTERISTICS

(Attached to the Agreement No. ... dated ...)

The parties agree to the following main operational characteristics of the power plant:

1. Generator’s generative output

a) Minimum generative output: … MV.

b) Maximum generative output: ... MV.

2. Time for start and synchronization

The following table defines the time for start and synchronization of generators with the national power grids from generators’ shutdown conditions:

3. Load variation speed

a) Average load reducing speed: ... MW/minute

b) Average load increasing speed: … MW/minute

4. Reactive power, voltage regulation and frequency limit in normal operational conditions

a) The power plant operates at the power parameter of 0.85.

b) Voltage regulation: The power plant's operations must maintain a voltage variation rate of ± 5% of the rated voltage at the connection points with the National power grids.

Frequency limit: The power plant operates with the frequency range of 49.5 to 50.5 Hz.

c) Capacity of frequency regulation.

 

 

 

Appendix IV

AGREEMENT ON SCADA/EMS SYSTEM, COMMUNICATION, PROTECTIVE AND AUTOMATIC RELAYS

(Attached to the Agreement No. … dated …)

 

Appendix V

PRICE AND PAYMENT FOR ELECTRICITY

(Attached to the Agreement No. … dated …)

I. Agreement price of electricity

1. Agreement price for thermal power station

1.1 General:

The following formula sets the agreement price for a thermal power station at the payment time in month t, year j (PC,j,t):

Including:

Fixed price in the year j (VND/kWh);

: Fixed price for operation and maintenance in month t, year j (VND/kWh);

: Variable price in month t, year j (VND/kWh);

: Price for transportation of main fuel in month t, year j (VND/kWh).

1.2 Fixed price:

Average fixed price for multiple years (exclusive of value added tax) is … (VND/kWh);

The following table sets the annual fixed price FCj (VND/kWh) from the initial date of commercial operation to the end of the power plant’s economic life (exclusive of value added tax):

1.3 Fixed price for operation and maintenance

The following formula sets the fixed price for operation and maintenance in month t, year j (exclusive of value added tax, natural resource tax on exploitation of surface water, environmental protection fee on solid waste):

Including:

: Components of the fixed price for operation and maintenance by major repair cost and other expenses in year j (VND/kWh);

Components of the fixed price for operation and maintenance by workforce cost in month t, year j (VND/kWh);

a) Components of the fixed price for operation and maintenance by major repair cost and other expenses in year j are determined according to the following formula (VND/kWh):

Including:

 Components of fixed price for operation and maintenance by major repair cost and other expenses in the base year are … (VND/kWh);

i: Cost slippage rate of components of the fixed price for operation and maintenance by other expenses is 2.5% per year (or according to the Circular on methods for power generation pricing and procedures for inspection of electricity purchase agreements);

l: Ordinal number of a payment year from the base year (I=1 in the base year).

Components of the fixed price for operation and maintenance by workforce cost in month t, year j are determined according to the following formula (VND/kWh):

Including:

: Components of fixed price for operation and maintenance by workforce cost in the base year are … (VND/kWh);

: Minimum regional wage at the payment time in month t, year j (VND per person per month);

: Minimum regional wage in the base year is … (VND per person per month).

1.4. Variable price:

Variable price in month t, year j (VND/kWh) is determined according to the following formula:

 = + +

Including:

: Components of variable price fluctuated according to changes of main fuel cost (coal, gas) of the power plant in month t, year j (VND/kWh);

: Components of variable price revised according to changes of secondary fuel cost (oil) of the power plant in month t, year j (VND/kWh);

: Components of variable price revised according to other changes in the power plant in year j (VND/kWh);

a) Components of variable price revised according to changes of main fuel cost:

Components of variable price revised according to changes of main fuel cost (coal, gas) of the power plant in month t, year j (VND/kWh) are determined according to the following formula:

Including:

: Components of variable price revised according to changes of main fuel cost (coal, gas) of the power plant in the base year are … (VND/kWh);

kHS,j :  proportion of performance attenuation in year j (%);

: Price of main fuel (coal, gas) for generation of electricity at the payment time in month t, year j is ... (VND/ton) for coal; or … (VND/BTU) for gas;

: Price of main fuel (coal, gas) for generation of electricity in the base year is … (VND/ton) for coal; or … (VND/BTU) for gas;

b) Components of variable price revised according to changes of secondary fuel cost:

Components of variable price revised according to changes of secondary fuel cost (oil) of the power plant in month t, year j (VND/kWh) are determined according to the following formula:

Including:

: Components of variable price revised according to changes of secondary fuel cost (oil) of the power plant in the base year are … (VND/kWh);

: Price of secondary fuel (oil) for generation of electricity at the payment time in month t, year j is … (VND/kg);

: Price of secondary fuel (oil) for generation of electricity in the base year is … (VND/kg).

c) Components of variable price revised according to other changes:

Components of variable price revised according to other changes of the power plant in year j (VND/kWh) are determined according to the following formula:

Including:

: Components of variable price revised according to other changes of the power plant in the base year are … (VND/kWh);

i: Cost slippage rate of components of variable price revised according to other changes is 2.5% per year (or according to the Circular on methods for power generation pricing and procedures for inspection of electricity purchase agreements);

I: Ordinal number of a payment year from the base year (I=1 in the base year).

1.4. Price for transportation of main fuel:

Price for transportation of main fuel of the power plant in month t, year j (VND/kWh) is determined according to the following formula:

Including:

: Particular variable price of the power plant in the base year is ... (VND/kWh);

: Charge for transportation of main fuel cost (coal, gas) and other expenses for generation of electricity at the payment time in month t, year j are … (VND/ton) for coal; or … (VND/BTU) for gas, as considered by Buyer;

: Charge for transportation of main fuel cost (coal, gas) and other expenses for generation of electricity in the base year are … (VND/ton) for coal; or … (VND/BTU) for gas.

2. Agreement price for the hydroelectric power plant

2.1. General:

The agreement price for the hydroelectric power plant at the time of payment for electricity in month t, year j (PC,j,t) is determined according to the following formula:

Including:

: Fixed price in year j (VND/kWh);

: Price for operation and maintenance in month t, year j (VND/kWh);

2.2. Fixed price:

Average fixed price for multiple years (exclusive of value added tax) is … (VND/kWh);

Annual fixed price FCj (VND/kWh) from the initial date of commercial operation to the end of the power plant’s economic life (exclusive of value added tax) is stipulated in the following table:

2.3. Price for operation and maintenance:

The price for operation and maintenance in month t, year j FOMCj,t (exclusive of value added tax, water resource tax, payment for forest environmental services) is determined according to the following formula:

Including:

: Components of the price for operation and maintenance by major repair cost and other expenses in year j (VND/kWh).

: Components of the price for operation and maintenance by workforce cost in month t, year j (VND/kWh);

a) Components of the price for operation and maintenance by major repair cost and other expenses in year j are determined according to the following formula (VND/kWh):

Including:

 Components of the price for operation and maintenance by major repair cost and other expenses in the base year are … (VND/kWh);

i: Cost slippage rate of components of operation and maintenance price by other expenses is 2.5% per year (or according to the Circular on methods for power generation pricing and procedures for inspection of electricity purchase agreements);

I: Ordinal number of a payment year from the base year (I=1 in the base year).

b) Components of the price for operation and maintenance by workforce cost in month t, year j are determined according to the following formula (VND/kWh):

Including:

: Components of the operation and maintenance price by workforce cost in the base year are … (VND/kWh);

: Minimum regional wage at the payment time in month t, year j (VND per person per month);

: Minimum regional wage in the base year is … (VND per person per month).

II. Contractual production of electricity

1. Average production of electricity by the power plant in multiple years at the delivery point during the term of the agreement is [...] kWh.

2. The contractual production in year N is determined by the operator of electric power system and electricity market during its making of the subsequent year's operational plan through the following formula:

QC = α x AGO

Including:

QC: the contractual production of electricity in the year (kWh);

AGO: the power plant’s production planned for year N (kWh);

α: the proportion of contractual production (%) as decided by competent governmental authorities on an annual basis.

3. The power plant's production annually planned is determined by the operator of national electric power system and electricity market during the latter’s making of the subsequent year’s operational plan according to the regulation on the operation of the competitive power generation market, via the following formula:

AGO = EGO if a x GO ≤ EGO ≤ b x GO

AGO = a x GO if EGO < a x GO

AGO = b x GO if EGO > b x GO

Including:

AGO: the power plant’s production planned for year N (kWh);

GO: the average production of electricity in multiple years as stated in section 1 of this clause. In the first year of operation, GO is calculated for each generator;

EGO: the power plant’s production planned for year N as calculated via the market simulation model by conditional scheduling method after converted to the equivalent value at the measurement spot according to the regulation on the operation of the competitive power generation market (kWh).

a, b: coefficient of correction of annual production; a = 0.9 and b = 1.1 or as prescribed by the Ministry of Industry and Trade.

4. The power plant’s contractual production in the month and in trading cycles of the following month is determined by the operator of national electric power system and electricity market during the making of the subsequent year’s operational plan according to the regulation on the operation of the competitive power generation market.

III. Contractual payment for electricity

1. Total sum of payments for differences according to the agreement in month t is determined according to the following formula:

Including:

: Total payments for differences in electricity according to the agreement in month t (VND), exclusive of value added tax;

D: Total amount of days in month t;

d: Trading date in month t;

i: Trading cycle i on trading date d;

: Agreement price (strike price) as stated in section I.1.1 or section I.2.1 of this Appendix; 

SMPd,i: The market price of electricity (pool purchase price) in trading cycle i, date d, month t (VND/kWh) as determined and announced by the operator of national electric power system and electricity market according to Ministry of Industry and Trade’s regulation on the operation of the competitive power generation market;

CANd,i: The market output price in trading cycle i, date d, month t (VND/kW) as defined and announced by the operator of national electric power system and electricity market according to Ministry of Industry and Trade's regulation on the operation of the competitive power generation market;

: Contractual production in trading cycle i, date d, month t (kWh) as calculated by the operator of national electric power system and electricity market by the methods defined in Ministry of Industry and Trade’s regulation on the operation of the competitive power generation market.

2. Total amount of monthly payments for electricity according to the agreement (Rt) is determined as follows:

Rt = (RC,t + RTT,t + Rk,t ­+ RTh) x (1+VAT)

Including:

RC,t:  Total payments for differences in electricity as per the agreement in month t are determined as per section 1, clause III of this Appendix (VND);

RTT,t: Total market payments as per the payment list (including the market electricity payment, market output payment and other market payments) in month t as determined and provided by the operator of national electric power system and electricity market according to Ministry of Industry and Trade's regulation on the operation of the competitive power generation market;

Rk,t: Sum of other payments arising in month t, resulting from dispute settlement, deferral interest, and correction payments (if any) (VND);

RTh: Taxes and fees as prescribed by competent governmental authorities, as follows:

- For the hydroelectric power plant: RTh = TTĐ x AG + RPS; including:

TTĐ: water resource tax rate and payment for forest environmental services incurred by the hydroelectric power plant as per the government’s regulations (VND/kWh);

AG: the production of electricity measured at the delivery point as per the power plant’s record of endorsed meters' data in month t (kWh);

RPS: taxes and fees arising due to competent governmental authorities' amendments to laws and regulations (if any).

- For thermal power station: RTh is composed of surface water exploitation tax and environmental protection fee against solid waste as levied on thermal power stations, or relevant taxes and fees resulting from competent governmental authorities' changes of laws and regulations (if any). The parties settle the payment of RTh as per the concerned entity's actual figures according to the regulations by competent governmental authorities (VND);

VAT: Value added tax rate as stipulated by the government (%)

3. Foreign exchange difference (FED): the parties, on annual basis, report to Ministry of Industry and Trade and the Electricity Regulatory Authority of Vietnam on the calculation of foreign exchange differences for the immediate preceding year and on the payment plans. Foreign exchange difference (VND) is determined according to the following formula:

Including:

m: types of foreign currencies in the electricity pricing plan as agreed by the parties (types):

n: number of original principal repayment phases for foreign currency i in the calculation year (phases);

Di,j:  the actual amount of original principal in foreign currency i paid in phase j in the calculation year. The actual amount of original principal in foreign currency i paid in the calculation year does not exceed the original principal in foreign currency i in the equivalent year as per the parties' agreed electricity pricing plan, as shown in the following table:

li,j: exchange rate at repayment phase j for foreign currency i in the year (.../VND);

li,b: base exchange rate for foreign currency i as agreed by the parties in the electricity pricing plan (…/VND);

 

 

 

Appendix VI

MAIN PARAMETERS FOR ELECTRICITY PRICING

 

1. Thermal power station

2. Hydroelectric power plant

 

 

 

Appendix VII

STAGES OF PROJECT

(Attached to the Agreement No. … dated …)

 

I. Stages of the project

1. Official commencement date of the construction of the power plant: […]

2. Initial date of interlock tests: [...]

3. Date of initial circuit closure: […]

4. Date of reliable output test: […]

5. Date of commercial operation of the generator i: […]

6. Date of the power plant’s commercial operation: [...]

1. Documents that Vendor must provide to Buyer

Vendor bears the duty to provide Buyer with valid copies of the following documents for the endorsement of the date of commercial operation:

1. The certificate of investment as issued by competent governmental authorities.

2. The connection agreement.

3. The power plant's license for power generation activities as issued by the Electricity Regulatory Authority of Vietnam.

4. The agreement for supply of fuel (for thermal power stations).

5. The certificate of tests and initial inspection of measurement equipment from competent authorities.

6. The permit for discharge of sewage into water sources as issued by competent governmental authorities.

7. The license for port activities as issued by competent governmental authorities (for thermal power stations).

8. The certificate of conformity to environmental impact assessments as issued by competent governmental authorities.

9. Documents on calibration tests for generators’ equipment and equipment connecting the power plant to the national electric power system.

10. The procedure for joint operation of the power plant upon the agreement with the operator of national electric power system and electricity market.

11. The procedure for reservoir regulation (for hydroelectric power plants).

Appendix VIII

PROCEDURE OF RELIABLE OUTPUT TEST

(Attached to the Agreement No. … dated …)

 

Appendix 4

REPORTING FORM OF PAYMENTS FOR ELECTRICITY

Quarter ... year…

(Attached to the Minister of Industry and Trade’s Circular No. 56/2014/TT-BCT dated 19 December 2014)